alleryStart learning →What is a free-trade zone?
AAn area where every nation in the world may trade tariff free
BAn area where a government stores imports before duty is paid
CAn area where partners trade freely but outsiders pay tariffs
DAn area where only agricultural produce may cross the border
Answer & Solution
Correct answer: C. An area where partners trade freely but outsiders pay tariffs
1. In a free-trade zone the member nations allow free or almost free trade among each other.
2. Few duties or rules restrict trade among the partners.
3. Nations outside the zone must pay the tariffs set by the individual members.
4. So the zone is open on the inside and protected on the outside.
5. It is not open to the whole world, and it is not limited to one class of goods.
_Source: OpenStax Introduction to Business (CC BY 4.0), Ch 3 "Competing in the Global Marketplace", section 3.5 International Economic Communities_
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